Global Poverty

As dawn breaks on top of a mountain near the China-Vietnam border, hundreds of water-filled rice terraces reveal themselves, clinging to the mountainside in geometric patterns in every direction. The rising sun, reflecting off the water, turns some of the terraces bright shades of orange and gold. Then solitary figures appear, black against the rising sun — peasants with their water buffaloes hitched to wooden plows.

The informal economy consists of cash and in-kind transactions and its practitioners do not pay taxes, hold licenses, or obey regulations. Pay is simply however much money is made, and there are no benefits. Because informal businessmen pay no taxes and work on a cash only basis (they seldom capitalize through loans, nor do they put savings into banks) economists have generally seen them as a drag on the economy. But as export-based jobs dry up, it provides a fallback safety net for many workers:

Until late December, Pilaporn Jaksurat, 33, was working full-time on a cotton spinning machine in a textile mill in Bangkok. She made about $7 a day and her benefits included bonuses of $30 a month for good attendance and a severance package worth about $800.

Then she was laid off when her factory, which sells fabric to clothing manufacturers in Europe, said it had to cut costs to cope with the global economic crisis.